Daiwa downgraded United (0486.HK) from buy to hold and its target price from HK $8.50 to HK $6.00.

The bank said aluminium prices continued to fall, down 27 per cent from their May 2011 peak, and United was expected to cut production as a result. Daiwa cut its forecast for aluminum prices by 4% in 2012 and 2013 by 6%, and it is expected that aluminum prices will face the risk of further reduction due to oversupply.

The bank added that global aluminium producers needed to cut production further to stabilize prices, and United was no exception, arguing that United's management had set targets too high and expected downside risks to the company's production, cash flow and debt repayment levels.

United closed 0.6 per cent higher at HK $5.46 on Wednesday.